Harmonization? Why Europe Wants the U.S. to Raise Its Taxes

James Pethokoukis at Reuters’ “Political Risk” blog explains, “Why Europe wants America to raise taxes” by citing the words of Finland’s prime minister. Post global recession, the prime minister wants a coordinated approach in Europe consistent with the goal of “tax harmonization.”

The overall tax rate will have to rise as well over the longer term. In some areas that can be done without much consultation between the countries. … However, raising such taxes can have detrimental effects on economic activity. This is especially so when a country acts on its own: capital and people can respond by migrating to jurisdictions with lower rates. … Parallel measures would help all of Europe: tax competition risk would be reduced and the public finances of individual countries would improve. Such co-ordinated tax changes could set also an important global example. In particular, it might encourage the US – with lower tax levels in most areas – to do what has to be done to address its spiralling budget deficit.

Competitiveness — The Europeans want the United States to raise taxes in order to be less competitive.

Thankfully, the Europeans have not yet consensused themselves into unanimity on the topic. Noel Sheppard at Newsbusters.org notes recent developments and the lack of media coverage, “Media Mostly Ignore German and Hungarian Tax Cuts.”

No coverage? That’s because they’ve already been harmonized.

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